How can I go about using my 401K money as a down payment on a house?

Answer 1

That is a big mistake doing that. You automatically get a 10% penalty for doing it plus you will have to be paying taxes on that amount.

The cost is the earnings you forgo on the money withdrawn, plus taxes and penalties on the amount withdrawn, which must be paid in the year of withdrawal. So avoid withdrawals if at all possible cause it's going to cost you a lot.

Answer 2

Most 401K accounts permit borrowing your own money and paying yourself back. This does not involve penalties and is not taxed. You do pay interest but it goes right into your 401K. Now, There are limits and usually you can only borrow up to about half of what your account contains. In other words if you have 50,000.00 you can borrow up to 25,000.00. The other issue would be the payments (withdrawn from your paycheck) could impair your ability to make the house payment so common sense must apply. Talk with your personnel department and they can explain it in accordance with your particular plan.

Answer 3

Check with your employer. Some employers will allow you to take a "loan" on your 401k. The loan will reduce the value of your account and you are required to pay it back with interest. Often the loan is paid back through deductions right from your paycheck - to make it simple. The interest that you pay back will be put into your account. So you are paying yourself interest. There is no penalty.

There is good and bad news with this:

The good is that the loan doesn't really cost anything. (You are paying yourself interest to be received in the future.) The interest rate is usually favorable also.

The bad news is that the interest is not considered mortgage interest and is not tax deductible as it is with a normal mortgage or equity loan. Also, when you make withdrawals when you retire you will be taxed on the interest that you deposited through your loan.

Answer 4

you will desire to obtain a 1099 exhibiting the withdrawal as earnings. there'll/additionally must be a ten% penalty paid on the unique withdrawal volume (it is likewise earnings) besides by using fact the with holdings (many times 20%). If the withdrawal replaced into achieved top, the 1099 would desire to be for roughly $28,000 or thereabouts. for sure, you upload the 20% with conserving into the your different with holdings. in the experience that your tax bracket is above 20%, it is going to decrease into your return, in any different case, you will get slightly greater back. If the tax and penalty weren't with held, you would be able to owe the government funds. As to your apartment, that is probable seen passive activity, meaning all you're able to do right this moment is write off the earnings (lease) you won from the valuables. Any loss would properly be carried forward. in basic terms a tenet, yet with all that is going on, you probable choose to make certain a tax professional.

Answer 5

Unless you quit your job, you can't. If you do quit your job then you can draw the money from your 401(k) but you'll pay tax on the full amount as ordinary income plus a 10% penalty if you are under age 59 1/2.

Answer 6

Actually talk to your HR people at work they'll have the paperwork for you to do this. and using it for a down payment on a house there is little to no taxes taken out unless laws have changed.

Answer 7

You CAN do it, but you have to claim a hardship. You lose money, and then can't contribute to your 401k for a year afterwards. That's what I did, but it was a BAD idea!